Tuesday, April 14, 2015

Hey startup parasites! We don't have time for you.

I am a good bullshit detector. Apparently, not good enough to have sensed that Keiretsu Forum and Collision Conference are parasites. Congratulations to both of you for wasting my time! Well done! You both reached out, pretended to screen our startup, asked good questions, made me present, and then kindly gave me the honor and opportunity to spend thousands of dollars for no good reason.About once every day or two, I get a spam from some pay-to-pitch event. They are usually easy to spot and trash. But the two above were special. The woman from Collision Conference interviewed me, asked about our business model and strategy, then told me she would encourage their screening committee to invite protocols.io because what we are doing is unusual and has huge social impact. A week passed, and we got the great news that we are indeed getting invited! Not only were we selected after their rigorous application round, but because we are invited, the cost of attending this conference would be reduced from $9,950 to a mere $1,450.I curtly replied that when we were invited to present at LeWeb, our $1,400 entrance fee was waived entirely. And the many other conferences that I attend when invited as a speaker, not only waive registration but also typically pay for the lodging and travel. I was going to let it go at that, but today's Keiretsu experience made me write this blog because these folks waste time that startups do not have.The Keiretsu Forum contacted us a month ago to learn more about protocols.io. Then a phone call for a quick interview. A request to enter our information into their platform. Then a screening conference call were I presented our deck to two people. A week later, the next round where I presented to a bigger screening committee with 4-5 people on the call. Then a request to address some of their concerns before we move to the actual pitch to their investors. And finally, a "by the way" note that they charge $4,500 to pitch their angels. The full egregious exchange is below. Of course, as soon as I got this, I searched for "Keiretsu scam" on google and found two excellent articles on BusinessInsider: My Latest War: Angels Who Charge Startups To PitchRead and The Amazing Response To My War Against Sleazebags Who Charge Startups To Pitch. Yes, I should have done this search before taking the call, but I don't have the time. The irony is that my lack of time as a startup co-founder is what allows these parasites to waste more of my time. I am not going to get into a discussion of whether it makes sense to pay $500 to attend an event where some VCs will speak for 20 minutes and then quickly escape, or pay to pitch angels who will most likely not invest in your startup, or pay an unknown conference to present your startup. Instead, I just made a very simple Google Spreadsheet to crowdsource information on which events charge and how much. I hope this will help us and others to avoid wasting time on the parasites.[UPDATE 1: The comments on Hacker News in response to this post are very revealing.][UPDATE 2: Several people from Keiretsu Forum have contacted me apologizing and saying this was a mistake. Apparently they always warn about the fee from the first phone call. Except, they don't mention any fees on their main Entrepreneurs page or the Application page. If you think this is a legitimate reasonable charge, why not be upfront about it?][UPDATE 3: Keiretsu and Collision have contacted me to apologize and defend their organizations. My last post in response.]

---------------------------------------------------------------[Update April 16, 2015]
Collision Conference claims that they are very transparent that they charge startups $1450-$1950 after inviting and screening/selecting. Here is how their clear pricing page looks:

The only clear thing about it is "FREE."

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[UPDATE 4/20/15. There are 34 chapters of Keiretsu. If each one screens 5 companies per month, as does the South California Chapter. That's 5*34*12 = 2,040 companies per year. Let's be conservative and say 1K screened companies. Yet, only 34 companies are listed in the 2014 portfolio. So the startups might have paid 1,000 * $4,500 = $4.5m to Keiretsu with over 90% of them losing time and getting nothing in return.]]
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Hope you had a great weekend. After reviewing the presentation I had the following comments.

- "Both have high valuations, especially Zappy. Hard to determine market size for Zappy but I think if they get those niche eyeballs they are valuable to companies that sell them"

- "There was no talk about how much they expect to be able to charge. What they expect as far as timing of revenues, break even plan, revenues at exit, etc. they really need to explain and show proforma expectations."If we can work on this, you are ready to present on our April forums.

Best,ZZZ

Keiretsu Forum Southern California270 Bristol, Suite 200Costa Mesa, CA 92626A region within the worlds largest network of Angel Investors. Keiretsu Forum Global has 34 chapters on 3 continents with 1400 accredited investor members. Our founding team of angel investor members, along with our partners and sponsors, are committed to growing the community of investors who are interested in funding entrepreneurial opportunities and providing valuable resources for their growth. Our goal is to grow our community of investors by providing an international platform to showcase the most promising opportunities, ultimately creating the right environment, a Keiretsu, for everyone's potential success with ROI.Since Keiretsu Forum's founding in 2000, its members have invested over $460m in companies in technology, consumer products, healthcare/life sciences, real estate and other segments with high growth potential. Forum members collaborate in the due diligence, but make individual investment decisions, with rounds in the range of $250k-$2m. Keiretsu Forum's community is strengthened through education on angel investing, as well as charitable giving.----------From: Lenny Teytelman<lenny@zappylab.com>Date: Tue, Apr 14, 2015 at 4:30 PM

Thank you ZZZ.Had a full day of meetings and will respond tonight/tomorrow.To clarify, the first question is about the market size?Best,Lenny

----------From: <zzz>Date: Tue, Apr 14, 2015 at 4:34 PM

The first statement is from the valuation aspect and the second is the addressable market size.

Just to clarify, because I think I didn't write it down on any email, we do charge a $4,500 fee for the whole process of presenting and joining the network.

I am baffled. How could you not mention it on the first phone call? How could you not mention it in the past month? That is highly inappropriate.Lenny----------From: ZZZDate: Tue, Apr 14, 2015 at 5:27 PMTo: Lenny Teytelman <lenny@zappylab.com>

Lenny,

It was my bad, thought I've sent, but I've rechecked the emails and I didn't.

We are not charging you any fee right now, this is only if you want to move forward to the forums.

Thank you Olivia for the comment and the invitation to present. However, I have a strong objection to pay-to-pitch (when it's a large sum). If Keiretsu Forum were to waive fees for all founders, I would be happy to pitch, but not as an exception.

Keiretsu tried to bribe me to take down this post. That's dumb. It's even dumber to remove the public comment and try to hide that fact. Text of your original comment:"Dear Lenny,

Please reach out to me at olivia@keiretsuforum.com. I am part of the founding Northern California team, and we are very sorry for your poor experience in Southern California. We would like to reimburse your administrative fee, and we would like you to present to our Northern California members (there will be no administrative fee to do so).

Again, we extend our sincerest apologies.

Best,Olivia"

The Internet has a good memory: http://web.archive.org/web/20150425011013/http://anothersb.blogspot.de/2015/04/hey-startup-parasites-we-dont-have-time.html

We are so sorry that a misunderstanding over costs has left you feeling that we wasted your time. I have sent you an email and it would be great if you felt able to post its contents as an update to your blog post.

Thank you Patrick. I will post it as an update some time later today. In the meantime, your e-mail to me is below.---------Hi Lenny,

I manage the startups team here and wanted to get in touch to say how very sorry we are that a misunderstanding over costs led to your feeling we wasted your time. We are a technology startup ourselves and we know how precious time is when you are trying to build a company.

We really try to be as transparent as possible about the costs of attending our events. We believe that we offer great value for money for all attendees. At our flagship event, Web Summit in Dublin, the numbers of those attending have doubled every year - which we feel shows that many people agree that we provide a great networking experience.

Regarding registration - physical space at any conference comes at a premium. As advertised, we're removing this element of the cost to startups who could bring value to the event and charging a fee for tickets & registration.

As I am sure you have seen, our Startups page on the website collisionconf.com clearly states that while exhibiting for selected startups is free, there is a cost for attending. To quote:

“Each week we selected 25 early stage startups from around the world to exhibit for free as part of our Collide Program. The bigger tech companies pay $9,950 to exhibit, meaning exciting, disruptive, early-stage startups can afford to attend no matter what. All they will pay is a discounted price for tickets and Collide registration, and we’ll give them a free exhibition stand.”

We apologise again for the misunderstanding between us. We were genuinely excited about the possibility of you attending Collision. As you know, we do need to make the effort to screen applications so that we present the very best experience for startups and investors at our events. We do get thousands of applications and make time to hop on calls to make sure the companies are viable and have cool teams. We end up choosing around 10-15% of those who apply.

Collision was really well received last year and more than half the participating startups either joined us at Web Summit and/or are returning to Collision this year. For me personally, that is a great testament to the event. We are working tirelessly to improve our systems to make sure everyone gets value from the event. We're a tech startup ourselves and we just want to put on an awesome tech event. The networking at our events has been called “legendary” and we try hard to live up to that tag.

Happy to answer any more questions or to discuss further. It would be great if you felt able to post this response on your blog.

Congratulations for your post, I am CTO of www.evovelo.com I am very feed up of this parasites as you are. This is our experience with Keiretsu:

We were invited and "selected" to pitch on a Keiretsuforum event in Barcelona and they asked for a fee of around 500€ to present.As it was not a big fee and the place where the event was going to be it was interesting for us we decided that it could be interesting.

They told us on the phone that 9 out of the 10 StartUps that presented last year found investment on that same event.

Before we pay anything we usually try to check if it worths or not. So I decided to contact that 10 companies from last year to ask how it went for them.

I was able to talk with 8 CEOs out of the 10 companies and none of them got any investment from that event.So I called back to the Keiretsu people to tell them about my findings, the person on the phone went panicking …

Latter I found on their website a list of companies that apparently were funded by their events here: http://www.keiretsuforum.es/operaciones-cerradas/ and it happened that one of them I know the CEO personally so I called her and asked about it, obviously they never closed any finance with them, they did not even pitched on their events!

So they are not only parasites they are compulsive liars at least the Keiretsu Spanish branch.